Nigeria, Africa’s largest economy, continued its downward spiral on the Global Competitive Index (GCI) as the country fell seven places to 127th position this year, from the 120th position it was last year.
The development was largely attributed to what the World Economic Forum’s (WEF) Global Competitiveness Report (GCR) 2014-2015, which was made available exclusively to THISDAY by WEF, described as the country’s weakened public finances as a result of lower oil exports.
But commenting on the GCR, the Chief Executive Officer, National Competitiveness Council of Nigeria (NCCN), Mr. Chika Mordi, who spoke to THISDAY, faulted the rankings, pointing out that the report, which referred to Nigeria as Africa’s largest economy, used the old GDP figures in its calculations. This, according to him, worsened the nation’s position.
Continuing, the GCR pointed out that institutions in Nigeria remained weak with a ranking of 129 out of 144. Other factors that led to the country’s drop in the GCR were insufficiently protected property rights, high corruption, and undue influence.
In addition, it stated that the deterioration in national security in Nigeria, which was also ranked 139 out of 144, remained dire.
“Nigeria must continue to upgrade its infrastructure (134th) as well as improve its health and primary education (143rd). Furthermore, the country is not harnessing the latest technologies for productivity enhancements, as demonstrated by its low rates of ICT penetration,” it stated.
However, on the upside, the report noted that Nigeria benefits from its relatively large market size (33rd out of 144), which bears the potential for significant economies of scale; a relatively efficient labour market (40th out of 144) driven by its flexibility (20th out of 144).
Furthermore, the GCR also acknowledged the country’s solid financial market (67th out of 144), following its gradual recovery from the 2009 crisis.
“However, poor availability and affordability of finance in general and the difficulties in obtaining loans in particular (137th) remain an important bottleneck to economic growth.
“Ahead of the 2015 election cycle, it will thus be critical to keep the ongoing reform momentum to diversify the economy and increase the country’s long-term competitiveness,” it added.
Overall, Switzerland emerged top on the ranking for the sixth consecutive year, and was closely followed by Singapore, USA, Finland and Germany in that order.
However, in Africa, Mauritius which was ranked 39th in the GCI reaffirmed its position as the continent’s most competitive economy.
But South Africa, Africa’s second largest economy, also dropped to 56th on the index. South Africa, according to the report, is now the third most competitive BRICS economy after China (28th) and Russia (53rd).
African economies enjoyed mixed success in their attempts to become more competitive, according to the GCR.
Other countries ranked on the index were Lesotho (107th), Cape Verde (114th), Botswana (74th), Namibia (88th), Zambia (96th), Ghana (111th), Senegal (112th) and Swaziland (123rd).
Among the oil-exporting economies, Gabon was the highest-ranked economy (106th) followed by Cameroun (116th), Nigeria, Angola (140th) and Chad (143rd).
Among Africa’s low-income economies, the most improved was Ethiopia, which recorded the biggest leap, rising nine places to 118th.
The report stated that despite years of bold monetary policy, global economic growth remained at risk as several countries struggled to implement growth-boosting structural reforms.
Commenting on Nigeria’s ranking, Mordi said the reasons adduced for the deteriorating rankings were Boko Haram and weaker institutions, an assertion he argued was “profoundly rebutted by our Ebola containment relative to countries ranked at par or better than us”.
“Poorer public finance, again a jaundiced opinion, as our public finances are stronger with lower deficit financing, fiscal restraint, a stable currency and single digit inflation, in contrast with Ghana whose currency is in free fall and debt has skyrocketed.
“Yet Ghana has an improved score on the same parameter; and weak health and primary education where we ranked the second worst in the world. Do you truly believe that?,” he asked.
Although he acknowledged that a high GCI ranking was good to have, he said it remains an opinion.
Mordi insisted that the most important opinion was that of the investment community and the reality of the country’s position.
He explained: “In this year’s World Street Journal survey of multinational CEOs, Nigeria ranked first as an emerging market investment destination. Investors vote with their wallet and Nigeria’s FDI remains the highest in Africa.
“Finally, the WEF GCI is a lagging indicator and does not reflect the actions taken this year. We expect an improvement and better allignment with reality in subsequent years as the NCCN, which came into full operations nine months ago has taken fundamental steps and put building blocks in place to improve our competitiveness.
“The most significant of these steps is a brain trust of 56 of the brightest minds and practitioners in Nigeria. They commenced work in April and include leading businessmen, CEOs of large corporates, CEOs and partners of the top multinational consulting firms, leading academics and regulators.”
The GCR’s rankings are based on the GCI, which was introduced by WEF in 2004.
Competitiveness includes the set of institutions, policies and factors that determine the level of productivity of a country. GCI scores are calculated by drawing together country-level data in 12 categories – the “pillars of competitiveness” – to create a comprehensive picture of a country’s economic performance.
The 12 pillars are: institutions; infrastructure; macroeconomic environment; health; primary education, higher education and training; goods market efficiency; labour market efficiency; financial market development; technological readiness; market size; business sophistication; and innovation.